Treasury Expands Buybacks Amid Rising Bond Yields, Fueled by Oil Price Concerns
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According to the statement, "this increase in buyback operation sizes reflects Treasury’s desire to provide greater liquidity support in longer-dated nominal sectors where there is consistent strong sponsorship from market participants, as evidenced by the significant volume of high-quality offers Treasury routinely receives in longer-dated buyback operations."
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Common DreamsIn announcing that it will buy back "at least" $4 billion worth of bonds over a two-month period, the US Department of Treasury said it was seeking "to provide greater liquidity support in longer-dated nominal sectors where there is consistent strong sponsorship from market participants."
Epoch Times BusinessIncreasing buyback operation sizes indicate the Treasury’s commitment to offer more liquidity support amid consistent and robust demand from investors, “as evidenced by the significant volume of high-quality offers Treasury routinely receives in longer-dated buyback operations,” the department said in an Aug. 19 statement.
CNBCTreasury buybacks are formally aimed at improving market liquidity for some less-traded instruments, in other words, ensuring that there are enough buyers and sellers in a given market to establish reliable prices. In this case, Treasury aimed to take longer-term maturities, of 10 to 30 years, off the market.
BBC BusinessThe Treasury Department said its intervention reflected its "desire to provide greater liquidity support" for longer-term bonds.
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While the announcement did result in interest rates for US treasuries dropping, economists and other political observers are warning that Treasury Secretary Scott Bessent's scheme to stop spiking yields will prove ineffective over the long term.
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CNBCTreasury Secretary Scott Bessent is in the midst of a historic effort to tamp down long-term Treasury yields. He may also be complicating the work of his counterpart at the Federal Reserve, Chairman Kevin Warsh.
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The Treasury Department on Wednesday said it would increase its buybacks of long-term Treasury debt, raising the maximum it will buy from $2 billion to at least $4 billion. The intervention had the effect of stemming a sell-off in the Treasury market that has pushed up yields to uncomfortable levels in recent days. The selloff had dominated global headlines as investors worried that rising Treasury yields would worsen an affordability crisis for consumers, complicate businesses' borrowing plans, threaten stock-market gains and make it more expensive for the government to finance its burgeoning debt.
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Financial TimesUS Treasury to double buybacks of long-term government debt Sharp sell-off in recent weeks has sent borrowing costs soaring
MarketWatchThe effect of a debt buyback can be to push prices higher and yields lower The Treasury Department said Wednesday that it will more than double the size of government-debt buybacks, sending yields sharply lower and stocks higher at the market open.
Epoch Times BusinessFrom Sept. 9, the Treasury will double the size of its government debt repurchases to $4 billion, focusing its buyback operations on 10- to 20-year and 20- to 30-year bonds.
Common DreamsThe Trump administration on Wednesday unveiled a plan to ease upward pressure on the cost of US debt by doubling its bond buybacks through November.
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Yields on long-term U.S. bonds fell midweek after the Treasury Department said it would expand long-end debt buybacks amid climbing rates.
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CNBCThe buybacks follow two other recent steps that have also effectively stemmed the rise in long-term Treasury yields.
BBC BusinessPublished Long-term borrowing costs in the US eased on Wednesday after the Treasury department announced it would buy back more debt.
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The recent surge in bond yields has been driven by rising oil prices caused by the US-Iran war, with investors concerned over inflation.
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Common DreamsExperts say that bond yields have been spiking to highs not seen since the start of the Great Recession due to investor anxiety over a number of factors, including inflation, the size of the US government's debt, and Trump's illegal war with Iran.
Epoch Times BusinessA broad array of factors has pushed up yields, including persistent war-driven inflation fears, fiscal worries, potential monetary policy tightening, and competition from artificial intelligence-related corporate bonds.
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Independent claims that didn't surface elsewhere in our corpus. Treat as supplementary — not corroborated across outlets.
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01 ZeroHedge Over the past several years, one of the more amusing debates gripping the market's Fed-watchers was whether the Fed's treasury buyback auctions were a form of soft QE, with this website consistently arguing that - contrary to what washed out ex-Bridgewater traders with a newsletter to sell may tell you - Treasury buybacks were just that, to wit:
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02 Bloomberg Dollar Risks Becoming Biggest Loser From Bessent’s Bond Buying Treasury Secretary Scott Bessent’s bold intervention to stem a potentially damaging rise in US borrowing costs has some investors saying the dollar will ultimately pay the price.
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03 CNBC While the buybacks aren't large compared to the total amount of debt outstanding, many in the markets interpreted the Treasury's new repurchase plan as a potent symbol of a long-standing effort by Bessent to bring down the yield on the 10-year Treasury and other maturities.
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04 BBC Business The move came after the interest rate on 30-year bonds, which are a type of debt used to raise funds from investors, hit 5.34% on Tuesday - the highest level in almost 20 years.
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05 Epoch Times Business A Treasury buyback is when the federal government purchases its own bonds before they mature, retiring older securities and replacing them with new issuance.
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06 Common Dreams 5 #000000 #FFFFFF "Trump is going to pump billions of dollars into the bond market to push down interest rates through the election, then let everything fall apart again," said one critic.
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07 MarketWatch Brett Arends's ROI Opinion: Want to bet on the bond rally? Check out these overlooked funds.
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Sources (8)
- bbc-biz
- ft
- cnbc
- epochtimes-biz
- marketwatch
- commondreams
- bloomberg
- zerohedge